Real World Applications of Cryptocurrencies — Video Game Virtual Goods
Despite the turmoil the market is currently in, it is important to step back and remember how Cryptocurrencies and the technology behind them, will change the world. As part of my series “Real World Applications of Cryptocurrencies”, and follow-up from my previous post on Food Traceability, which you can find here, I will be discussing how the Video Game Virtual Goods industry (from a gamer’s perspective) will be disrupted by the emergence of the blockchain and cryptocurrencies.
Video Game Virtual Goods— ENJIN Coin (ENJ)
The video game industry is huge — consumers are spending more time than ever, playing video games which has led to an explosive market growth. According to NewsZoo’s Global Gamers Market Report, there are currently 2.2 billion active gamers in the world, of which, 1 billion spend money while playing. The global video game industry is worth ~$108.9BN today with a projected figure of $128.5BN by 2020. This growth is extraordinary, however, there are drawbacks in the video game virtual good sector, including:
- Ownership — When purchasing virtual goods, a gamer doesn’t actually “own” them. They are merely buying a “license” and are often only available to be used on the game publisher’s proprietary platform. If a gamer gets banned from a game, he could essentially lose all of their goods and currency — they don’t truly own what they have. Imagine having a World of Warcraft account worth $5000 being banned, whether it’s your own fault, a misunderstanding or something caused by an external hack; you would lose everything.
- Centralization — Virtual goods are usually tied to a single game and are not transferable. For example, it’s impossible to trade a Dota 2 item for an Overwatch character skin. There are exceptions, i.e. Valve gives you the ability to trade CS:GO items for Dota 2 ones, but these are rare. Furthermore, trading outside of the game is virtually non-existent or very cumbersome, meaning all transactions need to happen in-game.
- Payment Fees and Speed —Game publishers/communities rely on third-party payment providers in order to sell virtual goods. For example, PayPal charges 2.9% plus $0.30 per sale (in the US) and Visa charges anywhere between 1.43% and 2.4%. Both gamers and publishers/communities are impacted by this, as virtual goods need to be priced higher to cover these fees. Additionally, this process is usually slow, where virtual goods take a few minutes to appear on the “game account”.
Enter the ENJIN Coin (ENJ).
Enjin is introducing Enjin Coin (“ENJ”), a new ERC20 token that gives communities, content creators, game servers and game publishers, an easy solution for implementing virtual goods and real value, into their gameplay and communities. Enjin will develop a powerful framework of open-source software development kits (SDKs), wallets, game plugins, virtual item management apps and a payment gateway platform.
Enjin is a well-established company based in Singapore and was launched in 2009. It is the largest gaming community creation platform, boasting 18.7 million registered gamers and 250,000 gaming communities across thousands of games. It is in prime position to solve the issues discussed above (and improve upon them) in the following ways:
- Minimal Fees —There won’t be a need for expensive third-party payment processors (i.e. PayPal, Visa, Stripe, etc.) anymore. Since ENJ is built on top of the Ethereum network, the only fees payable, would be the network fees which are minuscule in comparison to the current fees.
- Proof of Ownership — Since the blockchain is an immutable ledger, proof of ownership for virtual goods is trivial. Additionally, you no longer “license” a digital asset, but actually own it. Even if you get your account disabled, you still own the virtual item which you can trade or sell.
- Single Currency — Long gone will be the days where you need to deposit money in 5 different gaming systems to purchase goods for their respective games. ENJ would act as the single currency required to purchase goods across games. As a gamer myself, I am looking forward to the day where I can buy Hearthstone Card Packs, Call of Duty Weapons and FIFA Player packs with the same currency (ENJ).
- Cross-game trading — ENJ will enable trading between virtual goods from different games. Imagine being able to trade your “old” dusty Destiny items in return for items in the newly released Monster Hunter.
- Earn ENJ — ENJ will provide the ability for game publishers and communities to reward players (with real value) easily. Either this is by just playing the game, contributing on forums, earning achievements, the possibilities are endless.
- Real Value on Items — By pegging virtual items to ENJ, you essentially attach them with real value. Gamers will be able to sell their items and immediately get their ENJ in return. Currently, it’s nearly impossible to sell your items for “real value” —game publishers would usually give proprietary coins in return, or FIAT locked in their ecosystem.
As mentioned earlier, this post is focused on a gamer’s perspective. Enjin offers much more than this— it also brings a number of benefits for game publishers, content creators and communities. You can read more about them in their whitepaper.
How are ENJ Token used?
For gamers, the ENJ token use is very simple. It is a common currency between multiple ENJ-implemented games. It will also provide portability and transferability of virtual goods and digital assets.
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